The Horizon Advisor Network Investylitics Committee members met on the afternoon of Monday, November 11th, to review and discuss post-election investment and economic landscape. The unexpectedly strong and decisive election outcome has led many of the market strategists and economists we follow to update their outlooks and provide some insight as to what we can expect from a tax, regulatory, and economic policy standpoint during a second Trump administration.

It is also interesting to note that despite the bitter partisan rhetoric, concerns about higher prices, and significant debate over when the Federal Reserve Bank would cut interest rates, that the first nine months of 2024 led to the best stock market performance, as measured by the S&P 500 index, over that time frame during any presidential election year dating back to 1936.

Much of the optimism in the markets this year has been driven by GDP growth and corporate earnings. Both have consistently exceeded expectations quarter after quarter. There were significant revisions to several of the federal government’s measurements of personal income and savings, which showed that American’s were in a better place than had previously been reported. US real GDP grew 2.8% annualized in Q3, above expectations, largely fueled by healthy consumer spending, which rose at its fastest pace since Q1 2023.

The stock market moved meaningfully higher in the wake of a decisive election outcome for Donald Trump and the Republicans in Congress. While the initial response has been positive, we would like to remind you that markets are typically optimistic post-election, regardless of which side wins. There is good reason for this as markets have typically done well throughout the four-year presidential cycles during both democratic and republican administrations, as you can see in our next chart. You will note that the two presidents who experienced negative returns had significant recessions and/or geopolitical events on both the front and the back end of their terms.

GDP growth in the US has outpaced most of the rest of the developed world and is expected to continue this trajectory in 2025, as you can see in our final chart. Yes, the United States has its share of economic issues including the federal debt, growing income and wealth disparity, and an underfunded Social Security system. All these issues would need to be addressed regardless of which candidate won the election. However, for the moment, the US economy continues to be the “cleanest dirty shirt in the hamper”, especially compared to our G7 brethren.

The Federal Reserve Bank cut interest rates by an additional 25 basis points last week. The Fed seems determined to get interest rates down to a level they feel is less restrictive on economic growth going forward. A weaker than expected unemployment report, which was likely influenced by back-to-back hurricanes, gave them leeway to continue cutting rates. They will continue to be data dependent and will be watching closely as the new administration starts to implement its tax, regulatory and economic policies in the new year.

As we conclude today's report, it is important to remember that there are typically large differences between election promises, which are generally made to woo voters, and the ultimate policy that comes from legislation that must be passed by Congress. It would not surprise us to see variances between what was stated on the campaign trail versus what the final product looks like. However, it does look like the 2017 tax cuts and JOBS Act will be extended for most people given the makeup of the White House and Congress. This will likely lead most Americans to see similar tax rates for the next several years.

Despite the initial optimism the markets have shown in the wake of the election, we should still expect bouts of volatility given high prices and geopolitical uncertainty. Diversification and rebalancing your portfolio regularly have historically helped guard against these events. As always, the investment committee appreciates your trust and support. We are here for you if you have questions regarding your unique situation.

With the election in the rearview mirror, we hope you can relax and enjoy the holidays with your family and loved ones. They are far more important than what happens on Capitol Hill.